Greek startups riding out the pandemic
Blueground – a firm that arranges long-term leases for furnished apartments in Europe, the United States and Asia – started in 2020 with the assurance of tens of millions of dollars in funding and was poised to expand to even more markets, aiming to manage 50,000 properties in 50 cities worldwide in the next few years.
Spotawheel, an innovative platform for selling and buying used cars, was growing at a triple-digit rate before the pandemic hit, as was Dialectica, which works mainly with institutional investors and major consultancy firms. Things were also looking up for Ferryhopper, an online platform for ferry ticket bookings that had seen sales skyrocket by 300%, and also for Owiwi, which provides digital tools for staff hirings and evaluations. This was also the case for electronic car services and logistics firm EV Loader and for Phee, the only company in the world using seaweed to make innovative products.
All of these Greek startups saw the speedometer suddenly drop last February, when the coronavirus pandemic pulled the brakes on their impressive trajectories. It was, fortunately, a short-lived hiatus, as they were able to recover from the initial shock and contain the adverse impact of the health crisis with a few well-planned initiatives.
Kathimerini reached out to their founders and CEOs and asked them the same four questions about the changes brought about by the pandemic and their projections for the post-Covid-19 era: 1) Where was your company when the pandemic started? 2) What has been its impact on you so far? 3) What corrective measures have you taken? 4) What is your prediction for the post-pandemic business and economic landscape in Greece and elsewhere?
Athina Polina Dova: Owiwi co-founder and chief operations officer
We need fiscal incentives, low interest rates
1. Having clocked up several kilometers on its odometer, Owiwi is positioned for growth and expansion into new markets. We had set a target of a million users in 2020, and that target was met at the end of November. We already have a sizable presence in Turkey and have made some important deals in Latin America, and we are ready for more, in Israel and Slovenia. So, the pandemic has not really thrown a spanner in our works, in my opinion.
2. It is true that the area of human resources went through a period of stagnation as everyone waited to see how the market would react. It makes sense. When you’re working with companies and individuals, when this is your clientele, reflexes may be quick, but procedures are slow. We drummed up interest in our goods and services, and also saw that our audience’s knowledge of the innovative products and services we provide increased within a very short space of time. The argument we heard most often, of course, was: “So many jobs are going to be lost, and you’re talking about evaluations and hirings?” What was our counterargument? That while companies need to make organizational changes to survive (and staff management is key), new terms are also entering the process and nothing can be accomplished without tools, without the digital solutions we provide.
3. Our response to the health crisis was threefold: the right management of our existing clients, standing by them and listening to their needs; informing our audience of what we do and how we can help them; and making a serious opening into the business-to-consumer market, which skyrocketed in the first lockdown.
4. Like it or not, we were thrust into a new reality, both in Greece and in the rest of the world. If the conversation before the pandemic was about investing in the tech transformation, I think now it’s about the innovations behind the transformation. I think investor interest will focus on long-term opportunities, on trends that were accelerated by the pandemic, like teleworking, and on those that contribute to sectors that have undergone a technological revolution, such as healthcare, digital services and sustainable growth. For Greece, specifically, given the prevalence of small and medium-sized enterprises, the new landscape will be shaped, in my opinion, by fiscal incentives and policies (at the state level), as well as lower interest rates (at the private level), in combination with the vaccination campaign.
Alex Chatzieleftheriou: Blueground co-founder and CEO
The vaccine will bring a rebound
1. Blueground was growing fast, tripling turnover annually, until the outbreak of the pandemic. Our annual turnover in February was more than $100 million and we were already the biggest company in the world for stays of over 30 days. The virus temporarily halted growth, as a result of strict travel restrictions and corporate travel dropping almost to zero. Despite these unfavorable developments, though, our capacity has not dropped below 87% in all this time. Rates, of course, have been lower than in 2019.
2. The negative impact was initially stronger in the US and less so in Europe and the Middle East. From July on, though, we saw prices stabilize and even rebound slightly. With the second wave, which is proving particularly harsh in Greece and the US, we have seen a smaller impact on demand. In April, for example, the number of air passengers in the US dropped below 100,000 a day (95% down from 2019), while in November and December it ranged between 800,000 to a million a day – that is eight to 10 times greater than the lowest point in the spring. The pandemic also had a positive impact on Blueground, however. Most employers are offering their employees a more versatile relationship, allowing them to work wherever they want, and most will probably continue doing so even after the pandemic. This trend, which is called “work from anywhere,” is completely in line with our vision: making it easier for more and more people to live in different parts of the world and broaden their experiences. Through its large network of fully furnished and equipped apartments, Blueground is at the forefront of this trend.
3. The first thing we did was close our offices to prevent transmission of the virus in the workplace. We also launched a thorough cleaning and sanitization campaign for our apartments, implementing the recommendations of the health authorities. On the business front, we targeted new customer groups that emerged after the onset of the pandemic, like professionals choosing to work in a different city. We put a temporary freeze on our expansion plans and, unfortunately, had to cut back our teams in all the cities we do business in. However, we started hiring again in September and some of our former employees are back on our staff. We slashed operating costs by keeping the essentials only and, last but not least, adapted the terms of our contracts with the property owners (in the US mainly), to shield ourselves from sudden fluctuations in rental market rates. These changes have already yielded positive results. We have returned to satisfactory growth rates since August and are replanning our expansion into new markets, in the United States and also in Europe.
4. I am confident that the economy will improve quickly and markedly once a significant proportion of the population is vaccinated in the first half of 2021. As people start to recover from the psychological shock, we will see jobs coming back and the economy returning to pre-pandemic levels. This is reflected in the statements by investors at the international level and in stock markets that are banking on a relative return to normalcy. I believe that Greece also stands to benefit in the long term as a place of residence, as more and more foreigners and Greeks living abroad choose to spend the greater part of the year in this country because of the low cost of living and the high quality of life it offers.
Stavros Tsompanidis: Phee co-founder and general manager
Improvement will start in the first half of 2021
1. The pandemic found Phee – a small and versatile corporate structure – in the phase of developing, apart from seaweed, another natural product: used coffee grains from espresso machines. The pandemic helped us concentrate even more on this project and now we are close to launching it on the market, a move we are planning for the first quarter of 2021.
2. This year will close with a 70% drop in turnover. This is obviously attributed to the immense pressure all these months on the tourism sector, which is where we have the largest presence.
3. We are in a constant effort to identify and tap opportunities that may emerge in our sector as a result of the changes brought about by the pandemic at every level. It was our decision, however, to focus our available resources on further optimizing production and, secondly, on the application of technology in developing new, innovative products that fulfill consumer demand while respecting the environment.
4. I am optimistic about the prospects of the Greek and global economy, as the European Union has already set aside significant resources to help restart eurozone economies. And given the impending arrival of the vaccination, I believe that we will start seeing an improvement in economic activity in the first half of 2021. The Greek government has the opportunity to direct these resources in a targeted manner so that businesses with potential can acquire a competitive advantage and help boost the country’s gross domestic product. It must also ensure that all the untapped funds from the 2014-20 National Strategic Reference Framework are absorbed as soon as possible. Unfortunately, there are many businesses that are unable to absorb subsidies they have already managed to secure.
Christos Stefanatos: CEO of EV Loader
Covid is delaying the transition to electric mobility
1. We had just secured an initial round of funding to develop the evloader.com platform for locating charging stations for electric vehicles when the first lockdown started, so we were able to create three job positions for remote programmers in the middle of the quarantine. We were lucky to get excellent associates. One of our team’s new members had to relocate to Greece from Boston because of the pandemic. With experience in the internet of things applications from a stint at Amazon Robotics, he was the perfect fit for EV Loader.
2. We have seen a sizable drop in the number of vehicles that recharge at the stations we manage (at stores, hotels and parking garages) because of restrictions on travel. At the same time, electric car sales are not moving at the pace we had anticipated. We had expected to register 200 completely electric cars a month in the last quarter of 2020 and are now eyeing under 100 for the next six months.
3. We did not alter our strategy and remain committed to developing a user-friendly app that will help drivers of electric vehicles locate charging stations on the map and reserve a spot so their journey can be uneventful. We believe that the coronavirus has simply delayed the transition to electric mobility in Europe and in Greece, so we’re taking advantage of the hiatus to develop our product. We are impressed by the interest shown by several hoteliers in hosting charging stations to attract visitors traveling by road in their electric cars next tourist season.
4. By 2022, Greece and Europe will be back in full swing and economic activity will increase in tourism, catering but also in the purchase of commodities like electric cars. But for this to happen in the post-coronavirus era, and in our country especially, we need more green energy infrastructure. Whether it’s high-speed charging stations on our highways or big offshore wind parks, electrification could be a catalyst for growth in Greece.
Charis Arvanitis: Spotawheel co-founder and CEO
Digital transformation of businesses is a priority
1. We were recording triple-digit growth rates before the outbreak of the pandemic and were in the process of carrying out our plan for expansion into a third European market.
2. The entire automobile sector plunged in the first lockdown, but a rebound was evident in the summer, with demand reaching pre-coronavirus levels and cars emerging as the dominant mode of safe transportation. So, the summer period was great for Spotawheel as we saw record-breaking sales. The second lockdown is different, with a drop in the market of around 35-40% (compared with 2019) that looks like it will persist. Nevertheless, we are still enjoying double-digit growth, reaching out to consumers, communicating with them digitally and maintaining our high standards of quality. This is giving us accessibility at a time when consumers are increasingly turning to reliable online purchases.
3. Our priority is to ensure that our business will run smoothly and keep growing post-Covid-19. Our initial response to the pandemic was to put off our expansion into new markets to focus on strengthening our presence in Greece and Poland. We also focused on developing our technical infrastructure and creating specialized groups so that we can deal with the challenges of a growing fleet and return to three-digit growth rates in 2021 and beyond. We developed innovative products and options that are aimed at making our customers feel safe. These initiatives have obviously paid off because we saw our market share double in March and have been able to offer new employment opportunities.
4. The rebound will depend on the strategies employed by governments to strengthen investments. Teleworking, meanwhile, presents a whole new set of circumstances for businesses in terms of their operating costs and human resources management. And as for consumers? They will research, communicate and make purchases online more and more frequently. This means that the digital transformation of businesses is a top priority, as it will give a significant advantage to companies that make meaningful investments in their online presence.
Christos Spatharakis: Ferryhopper co-founder and CEO
The pandemic has brought new consumer habits
1. The beginning of 2020 was a great one for Ferryhopper. We had just gained a foothold in the Spanish market, our team had grown to 30 from 10 in 2019 and sales were up 300%.
2. The decline began at 20% in February and reached 95% in March. We saw a small uptick starting in mid-May and the summer season was quite good, given the circumstances. By the time the second lockdown came into force, we had managed to contain the damage to 30% (for the entire year).
3. Our first priority was to protect our team and ensure that everyone was safe, so we chose to go 100% remote. Our second was to focus on providing our customers with useful information about the pandemic and travel, and this helped us a lot because it allowed us to reach out to a broad range of people who needed our support. We also adjusted our strategy in terms of the audience we were reaching out to. Since the company launched, the majority of our customers have been abroad. In a year like this one, though, we needed to focus on Greek travelers so we put our efforts into this. Those initiatives have paid off even more than we expected.
4. No one can predict with any certainty when we will put this extremely difficult period behind us. What we do know is that after a shock like this, new trends have inevitably emerged, be they in consumers’ purchasing habits or in how people interact with one another. So, the faster we understand these trends and changes, the easier it will be to adapt to a new reality.
George Tsarouchas: Dialectica co-founder and CEO
Markets are confident about the future
1. We were growing fast when the pandemic began; 2020 had started well, taking the baton from a successful and record-breaking year.
2. Dialectica is a company that is intrinsically linked to global investment activity. Most of our clients are institutional investors, private equity funds and big consultancy firms that reach out to us for help in acquiring information on and assessing investment deals worth millions through discussions with experts in the markets they are interested in. When the first wave of the epidemic hit, there was a lot of uncertainty and high volatility in the market, which led to a temporary freeze on investment activity. As we all know, though, there are also opportunities in every crisis, so investment activity restarted once the initial shock wore off. Moreover, the prospect of a vaccination and the support measures granted to governments and central banks to bolster the market helped improve the climate. In our case, therefore, the consequences of the pandemic were temporary, impacting demand for our services only during the first few months.
3. Our key priority was – and still is – safeguarding the health of our people and their jobs. This is why we made the deliberate decision to absorb whatever losses we incurred, so that we would not have to reduce salaries, put staff on furlough or proceed with dismissals. To achieve this, we examined all of our company’s expenditure and cut anything that was not essential, such as corporate trips and fixed-asset investments. This even allowed us to hire more staff so that we were in a position to support our clients in the best possible manner when demand returned – as it did. It is worth noting that our contacts with investors around the world give us an instant understanding of the course of the markets and allow us to plan our next steps ahead of other companies. For us, 2020 will come to a close with more than 150 new employees (for a total of more than 270), as well as new offices in Montreal, where we have a team of 28 talented young people – among them several Greeks who relocated to Canada from our Athens office.
4. At least 90% of current stock values are based on expectations of profits nine or 10 months down the line. Therefore, if we look at all the major stock markets, expectations for the future are good. This climate of optimism is further bolstered by expectations of a more stable administration in the United States, which is also seen as reducing geopolitical risk. That said, the impact of the economic crisis triggered by the pandemic will certainly be felt for a very long time to come and will affect certain areas of the economy more adversely. The situation in our country is, unfortunately, tougher, because the economy is not export-oriented and is also very exposed to fluctuations in tourism. Moreover, the economy’s backbone consists of very small businesses that do not have access to capital and are not competitive. It goes without saying, nevertheless, that the path to a rebound will pass through the success of the vaccination and the ability to secure sufficient doses.
